State loses school funding case

Randy Pittenger, left, President Board of Trustees of the Belton Independent School District, greets Richard Gray III, after Judge John K. Dietz ruled in the 250th Judicial District Court in Travis County Courthouse in Austin, TX, that the way the state funds schools violates the Texas Constitution, Monday, Feb. 4, 2013. Gray III is a lawyer representing 407 Equity Center school districts.

Photo By Bob Owen/San Antonio Express-News

Judge John K. Dietz looks over the 250th Judicial District Court in Travis County Courthouse in Austin, TX, after he ruled that the way the state funds schools violates the Texas Constitution, Monday, Feb. 4, 2013

AUSTIN — State District Judge John Dietz on Monday declared the state school finance system unconstitutional, ruling in favor of four plaintiffs groups representing more than 600 Texas school districts after a months-long trial.

Dietz ruled that the system is inefficient and inadequate and has created a statewide property tax, all three in violation of the Texas Constitution.

The system is unsuitable for providing the constitutionally required “general diffusion of knowledge” for low-income students and English-language learners, while districts with low property wealth are forced to tax at or near the state cap of $1.17 per $100 of taxable value and no longer have discretion to set their own tax rates, he said.

The ruling is preliminary, and it will take a month or more to issue a detailed written order, Dietz said.

The decision cheered superintendents and many Democratic lawmakers who said they hoped it would spur restoration of education funding cuts made in 2011. But the expectation that the case will ultimately be decided by the Texas Supreme Court set off debate about how quickly the Legislature should move.

Twelve school districts in Bexar County were among those that sued the state. Dietz prefaced Monday's ruling by agreeing with their basic arguments: that the state's funding is inequitable, has not accommodated enrollment growth and is not adequate to meet increasingly challenging academic standards.

“We either want increased standards and are willing to pay the price, or we don't,” he said.

Dietz also presided over previous school finance litigation in 2004, which set the stage for the current system's passage in 2006. Several such lawsuits have affected school finance since the so-called Edgewood case of the late 1980s.

Dietz declined to rule on the requests of another group, Texans for Real Efficiency and Equity in Education, which argued that greater competition could result in a more efficient system. In response to arguments by a group representing the state's charter schools, he said the Legislature has the discretion to fund charters differently from other public school districts.

In closing arguments, Gray told the court that if the education system is not fixed, the state will lose tax revenue and social costs “will explode.” He said superintendents who testified all said they “feel that they are working with their hands tied behind their back.”

Attorneys for several plaintiffs groups said the state is required to perform regular studies to determine the cost of funding its education system but has not done so for years.

“Would we build a bridge with an insufficient budget and would you want to drive across it?” asked David Thompson, attorney for the so-called Fort Bend Independent School District plaintiffs group. “Why would we do that with our schools?”

But Assistant Attorney General Nichole Bunker-Henderson said that while it is true that plaintiffs were asked to do more with less, “our system did not collapse. ... Perhaps we have become more efficient.”

She continued: “Are the students in Texas better off now than they were eight years ago? The answer is yes.”

Also arguing on behalf of the state, Assistant Attorney General Shelly Dahlberg said school districts make many choices that affect their bottom lines, such as offering certain tax exemptions, granting across-the-board raises “without regard to performance,” refusing to consolidate with neighboring districts and deciding whether to go to voters to request tax rate increases.

“This, your honor, is local control and district decision-making at its very core,” she said.

Dietz acknowledged the complicated nature of the trial, noting that more than 10,000 exhibits were entered into evidence and about 240 hours of courtroom testimony were logged.

“It's obvious the system for funding public schools is broken, and we're glad the court sees that,” North East Independent School District Superintendent Brian Gottardy said of the ruling. “A balanced budget should not come at the expense of our students but, ultimately, it will be up to the Legislature to fix.”

Van de Putte said in a statement that “at the very least, we can start talking now about funding enrollment growth and restoring the devastating $5.4 billion in cuts that were made to public education in the previous legislative session.”

Alamo Heights ISD Superintendent Kevin Brown, who was in the courtroom Monday, said a quick response is needed.

“My hope would be that the Legislature will take action,” he said.

Jose Cervantes, superintendent of Edgewood ISD, echoed Brown's sentiments and said the district “has made tough decisions to keep serving our students despite the hurdles of the state's inequitable method of public school funding.”

House Speaker Joe Straus, R-San Antonio, said there would be “conversations over the next few weeks” over the ruling and the Legislature's course of action.

“Most feel as though this is a waiting game during the appeals process. I'm not so sure. ... I would hope that we wouldn't wait just for the sake of waiting,” Straus said.

But Williams, the Finance Committee chairman, said the lawsuit makes it difficult for the Legislature to act sooner.

“And I've had it, I'm up to my eyes with these school funding lawsuits. I don't think they're productive. It's become a cottage industry, and you've got a bunch of lawyers here in Austin that are egging these school districts on,” he said. “This isn't going to be the way that we get to the best solution.”

lkastner@express-news.net

Peggy Fikac contributed to this report, and Francisco Vara-Orta contributed from San Antonio.